Top 10 “Annual Fund” Best Practices

Mike Buwalda, CSA Stewardship Connections Editor

Last month I asked Christian nonprofits in the CSA family, “Did you have any success with funding your operations budget last year?” The responses were very helpful and heart felt once again! Below, you’ll find 10 ministry-tested lessons for improving your annual fund, followed by a compilation of actual responses received in our survey.

1. Emphasize trust, not techniques.
   Raising funds for ministry requires knowledge, skill, and systems in place. But most important is your trust in our faithful God to use you to help connect God’s people and God’s resources to God’s work around the world.
2. Connect your operations needs with other “front line” activities tied to your mission.Combine requests for operations and programs (i.e., scholarships, special projects), building your administrative and fundraising costs into those requests. Rename your annual fund or general fund requests to reflect the overall mission of your organization.
3. Focus on caring for donors, not soliciting donors.Find out how you can pray for your donors, and do it—over the phone, in person, and in staff meetings. See yourself as a pastor to your donors, and watch what God does with those relationships!
4. Create special campaigns and giving clubs.
   Launch a deliberate effort to specifically ask people for an ongoing commitment to pray, give, and tell others about your ministry. Those who commit are with you, so emphasize appreciation and updates with them instead of the usual appeals that everyone else gets.
5. Look beyond your current needs.Don’t make the mistake of spending all your time chasing the next gift. Build your strategy around patterns that encourage relationships with your ministry partners that are strong during and even after their lifetimes.
6. Step up your personal contact strategy.Ask your board members to help you thank donors—as many and as often as possible. Be more visible through one-on-one and group meetings.
7. Leverage the momentum from other campaigns.Maximize the “spill-over” effect of other campaigns (i.e., capital or endowment) by using the opportunity to highlight your ongoing programs.
8. Reenergize your list.Make a concerted, intentional effort to encourage inactive people on your list (lapsed donors, alumni, etc.) to get involved. It’s a lot harder and more expensive to get new donors on board.
9. Find reasons to communicate more often.
   In addition to the normal “thank yous”, receipts, and donor updates, find create ways to stay in touch with your supporters with things like board updates, new plans, other ministry news, etc.
10. Lower your expenses.Raising money isn’t the only way to help your annual fund budget. Take a hard look at your expenses and see if any could be cut or delayed.

From Your Peers
Presented here is a sample of actual responses CSA received in a recent survey that asked, “Did you have any success with funding your operations budget last year?”

I’ve spent the last 25 plus years as a fundraiser for universities and hospitals, but just this year I was prompted to focus our fundraising on caring for the donor and not on soliciting the donor. It is not a new concept to some, but it is a new focus for me and this ministry. This past year we added a person to spend full time on fundraising. We are a new ministry—just 5 years old. We gave our new hire the title director of donor care—a title I found on the Peacemakers Web site. By practicing this concept, we have seen many opportunities open up for our fundraising program. We have many exciting stories; let me share just one. A donor was ill when our director of donor care arrived for his appointment. To demonstrate care for this donor, no mention was made about a gift or the needs of our ministry. They only discussed the donor’s needs and spent time in prayer. At the end of the visit, the donor said that he was about to sell his house and, when it was sold, there would be a gift for our ministry—so much for making the ask and closing. The gift income has not magically increased because of this new focus, but we are seeing the seeds we have planted beginning to grow. We are confident that God will honor our focus on others.

Anonymous by Request

We had great success and exceeded our budgeted goal for the third year in a row. We stepped up our contact strategy with personal visits to high-end donors (i.e., $5000 or more) and phone calls to all others, but the introduction of the Samuel Morris Society for $1000 donors with a target goal of 500 charter members was key. We also intensified our segmentation and increased our efforts to multiply monthly and quarterly gifts, which was also very successful. Our alumni solicitation rates are nearing 50% this year.

Harold Hazen
Taylor University

We did meet our annual fund goal for the last fiscal year. I believe there were two reasons that specifically led to that success. The first was our momentum of being in a capital campaign that “spilled” over to unrestricted giving, and the second was our focus on converting more alumni into donors. With our conversion to a new computer system, we hope that our targeted fundraising will continue to show results.

Anonymous by Request

Our revenue exceeded our income goal. More importantly, Christian Reformed World Missions received more money than we spent. Thus, we funded our operations budget from funds received last year. What happened? We worked like mad, prayed really hard, and did some things that our organization had not done before. Lessons? Don’t take short-term good results in plain dollars to mean much. What matters is establishing patterns (even if those patterns have to be ways of constantly finding new donors).

Gary J. Bekker
Executive Director
Christian Reformed World Missions

Our fundraising efforts for last year were very successful because we did not separate the ask for operations and scholarships. We call our annual fund “The Seminary Fund” and let our constituents know that it includes operational items but that the key part is that it discounts tuition by about 20%. In other words, if we do not raise these funds, we would need to increase tuition for our students by that same amount. Most everyone gets the point and we don’t have to make specific asks for operations.

Brian R. Fort
Director of Development
Denver Seminary

Did we have any success with funding our operations budget last year? The short answer is yes. Why?

1. Relationships, relationships, relationships
2. Trust, trust, trust
3. Accountability, accountability, accountability
   (Bob notes that 20 years in the military also gave him the gift of brevity.)

Bob Dewhurst, CFRE
Director of Development
Alabama Baptist Children’s Homes

God provided the funding we needed in 2004 and it appears to be the same answer in 2005. God reminded me to continually trust Him. He is faithful. I also was reminded that people want to know the facts about the vision and needs without manipulation.

Ted Barnett
Africa Inland Mission

We have managed to finance all of or needed expenditures. In addition, we gave love offerings of over $1.4 million to the tsunami and Katrina. We feel very blessed by the response of our people this year. People do not mind being asked for money if it is done in the right way and for the right cause. Most Christians want to be generous, but just don’t know how. A disaster seems to challenge their faith toward a positive, whereas the church asks every week. It is hard to motivate them in their regular giving discipline due to so many others asking for their money, such as advertising, other not-for-profits, and just everyday needs such as gasoline and natural gas for heating. Proper stewardship is a rare asset. Most choose not to comply.

Mike Graham
Stewardship Minister
Southeast Christian Church (Louisville)

One thing I learned from a foundation director is to more regularly communicate the activities of our ministry. Send things like highlights from a board meeting and key objectives for the next year in addition to the regular stewardship reports. It has paid off.

Cathleen Lawler
The Evangelical Alliance Mission (TEAM)

One thing I told my boss was that I am not after the donors one-time gift; I want their consistent committed giving each month and hopefully they will remember us with a planned gift or estate gift at the end of their life. The first thing I did last year at Christmas was to call each and every one of our donors and thank them for every gift we received—even if it was $5. This made a huge impact with my credibility when I made the call and only thanked them. Many were caught off guard because they probably thought I was calling to ask for something, but when I said, “I am just calling to say thank you from Ceta Canyon. We appreciate your support so much”, many said, “no one has ever called us before!” You can’t thank your donors enough, so always be thinking of creative ways to thank them and go above and beyond to do it—it should pay off in the end. Another thing we pushed this year was our “Friends of Ceta Canyon” campaign. We asked for a consistent commitment from our donors to pray for us, give generously, tell others about Ceta Canyon, and be our ambassadors in their local churches, businesses, schools, civic organizations, etc. These dollars go directly toward our operating budget.

In a report I presented to our board at the first of November, I reported that Ceta had received over 130 new gifts from over 120 new, first-time donors this calendar year. Reaching new donors is a huge challenge in fundraising. It is much easier to keep the donors you have than to attract new ones. For my first year, I thought this was not too bad. This Christmas, I had some of our wonderful trustees personally call our top 70 donors and thank them for their giving. I am excited about this for two reasons—our donors should have experienced the “wow” factor by receiving a call from a trustee, and our trustees are getting more involved and enjoying it. This will give them confidence, and the next time I ask for help, they will be more likely to say yes and look forward to it. This was my first year at Ceta Canyon and our first year for a development director and concentrated effort on fundraising. So many firsts happened this year and lots of ground work was being laid for the future. I had to get to know our donors and educate our friends, churches, and long time committed supporters before I could possibly ask them for a donation, and that just takes time.

Susie Akers
Director of Development
Ceta Canyon Camp & Retreat Center

We had numerous gifts from in state as well as out of state as a result of Katrina. Folks really stepped up to the plate. However, we have been seeing an increase in giving each year. My assistant director and I visit a lot of folks to tell them we appreciate them partnering with us. We also give numerous talks to civic clubs, UMWs, UMMs, and Sunday sermons. Probably, in all, we speak to four groups a month. You have to eyeball the people and have a passion for this work. We just tell the honest story and give examples of youth who come to us and depart knowing we love them and so does God. Youth are distrustful at first, but they warm up when they realize we want to help them and not harm them.

Anonymous by Request

We launched a small capital campaign. Our closest donors responded well. However, the concept of “above and beyond” their current giving was not grasped. Thus, we redirected funding that took away from our annual budget. Redirected gifts and a 10% reduction in facility utilization has placed us in an end-of-year short fall in excess of $30,000 on a budget of $340,000. Tough times!

Rick Miller
Executive Director
www.brethrenretreat.org

Eastern Christian School was successful in meeting its operating budget needs in 2004–2005 because of a combination of factors. Although year-over-year giving to the annual fund was flat and slightly below the budgeted expectation, expenses were also lower than expected, in part due to hiring that did not take place until near the end of the fiscal year.

Kurt Kaboth
Chief School Administrator
Eastern Christian School

We did have some success in funding our operations budget this year. Several reasons for this, in my opinion, is that we had a successful winter event in February, invested in our relationships with our donors, and had a matching gift challenge that motivated more giving. We are thankful for all the Lord has provided for the Mission Society!

Johnny Winkle
Manager for Advancement Activities
The Mission Society

Part of our success was renaming it tied to its mission. Instead of “annual fund,” we call it the “Seminary Fund.” By helping people understand that the fund underwrites every student as well as lowers tuition by subsidizing operations costs, it makes it appealing to all.
 
Gary Hoag
Denver Seminary

We did meet our Annual Fund goal in fiscal year 2005, but only with the help of a large estate gift. The trends at Greenville College seem to be that, although overall giving continues to rise, it is getting harder to raise unrestricted gifts. More and more donors (especially major donors) are designating their gifts for specific projects. Donors seem to be wanting more control and accountability these days.

Dave Disch
Director of Development
Greenville College

During the last year we finished a $6 million capital campaign and immediately launched into a new $4 million campaign. We experienced significant growth in attendance, baptisms, memberships, and general fund-giving. Our general fund-giving for 2005 will be double 2003’s numbers. Overall, we have been able to fund our budget. However, we have always been conservative in our spending and budgeting. Staff is projecting some major increases for the next fiscal year budget (starting in July 2006), so that may stretch our giving. However, we added 140 new families to our new campaign, many of which were new in 2005. We have a number of “high-capacity donors” (as John Maxwell would term them) who are generous in funding ministry. Add this group to a church family that is generally in tune with their call to provide resources for ministry, and managing a budget is relatively pain free.

Brad Janowski
Calvary Church
Muscatine, IA

We are an unusual not-for-profit in that we have two auto repair shops, a donated vehicle resale lot (after repair and safety checks), and a newly formed (3 month old) construction crew. We take people into the program, which includes employment, to help them restore their lives. Most are ex-offenders or men out of drug or alcohol rehabilitation. We practice stewardship and make the programs sustainable, for the most part. Obviously, we have more overhead than most for-profit companies as we do life-skill, spiritual, and job training. In addition, we have an administrative side, which manages the programs, works with the public and collaborative partners, etc. We do our own bookkeeping. In short, we have a $9,500 monthly nut to crack over and above the two employment areas of operation (approximately 15%). This measures against an approximately $750,000 annual budget. Our organization, which is 8 years old, has always sustained itself with minimal grants, giving, and donations. There has never been a concerted effort at setting up a donor base. Our board, although supportive in words, is not in action or raising or nurturing a donor base. End result: we have a growing organization, employing and restoring 15 people, and cannot fund our administration without some fundraising program being implemented. I would guess that there are many not-for-profits like us. I write to encourage you to encourage others as you have me over the last 18 months.

Bill Price, Jr.
CEO/President
Restoration Enterprises

We do not have an official annual fund drive and are considering doing so. We have funded operations through administrative fees, designated gifts throughout the year, and some interest from investments. But our operations budget is increasing next year due to some major upgrades in ministry operations as we strive to move forward for effectiveness. I guess you could say we had success because we made our budget, but it wasn’t because of focused development work in this area.

Glen Osborn
President
China Outreach Ministries

This year we feel we had considerable success in our general funding—not because we didn’t struggle or because we got enough funds (it is still a challenge), but because we have set up a much more proactive system and department for caring for and communicating with our donors and partners of our general fund. As a result, we have seen a more proactive response to this fund, especially in this year end.

Mike Rogers
Family Communications, Inc.

In 2004, we struggled because of the substantial fall-off of foundation grants. In 2005, we are reasonably close to meeting our operation budget but won’t know for sure until the end of December as at least 30% of our income comes in during the second half of this month.

Malcolm Graham
Executive Director
African Enterprise

I would say my success was mild. I received some funding, but not as much as I’d like to cover all operating expenses. The primary reason I didn’t get all I need is a lack of commitment from folks with the money to provide for the organization.

Aaron Markovits

It seems difficult getting people excited about the annual fund. We are thinking of targeting projects as part of the fund in the future. If not funded, they would have to wait. We also did not make the annual fund part of the capital campaign, so we have two funds fighting with each other and people more excited about the capital fund.

Kevin Kaemingk
Superintendent
Valley Christian Schools

No, because my list of possibilities were not big-money people. I also am only working with people who have been givers to our organization in the past.

Shirley Williams

I've been with African Enterprise (AE) now since December 1974, and the Lord has seen us through every kind of economic situation. When I joined AE I came from the hard-nosed banking and insurance world that required stringent, strict and stressful budgeting forecasts and controls, which I thought would be appropriate to apply to AE. It took me only 30 days to discover that God's arithmetic is based on the utmost faith. I had to
unlearn fast and rely on the prayers of colleagues, staff and friends of the ministry. The funding projections based on ministry needs were then seen as being accomplished through sheer and total reliance on the Lord's faithfulness. I concocted the term "faith risks" so have been risking myself in His faithfulness ever since. Hence, I believe if we are true to His call on our lives, He does come through. The lesson I learnt is yes, He owns all the cattle on a thousand hills, but from personal experience getting cattle down from mountains and hillsides, requires hard work, skill and patience! I'm constantly amazed at the Lord's faithfulness and have come to understand that He is with us in our battles, the cold-face struggles, the ups and downs, the frustrations, our weaknesses and also our waywardness. This requires our commitment and dedication to be faithful to Him in all things. On reflection as I read this response, it sounds like I know it all, if that's how it comes across please forgive my arrogance. It's not intended because I fail dismally all the time.

Malcolm Graham
African Enterprise

It has been difficult to fund our operating budget in 2004 and 2005. We are a regional headquarters of a denomination. We consist of about 280 churches with an independent board of directors and staff. Our operating budget is funded by voluntary giving by these churches—not an assessment or mandated support level. I think that there are a number of reasons why we have been experiencing difficulty. Church income is down, despite the good reports regarding the economy. Members and regular attendees seem to have other priorities and don’t necessarily understand the need of the church to be supported by the members. Regular appeals by other organizations may negatively impact giving to the church, as well as poor budgeting/ money-management by members. We have experienced significant turmoil in the past year and a half. Turmoil and uncertainty can depress giving, even when the issues are clear and churches are in agreement with statements made and stands taken with regard to issues. The tsunami and hurricanes had a major effect on revenue flows. Some members may have diverted funds normally provided to their church to support what they perceive to be more pressing needs. Available discretionary cash for charitable giving may be limited for many families. As they picture themselves in similar disasters, they empathize and alter their financial commitments. We no longer have the level of relationship in place that once characterized our ministry with and to churches that are part of our region. While we may have good and even strong relationships with pastors, we may not have the depth of relationship with church leaders and members that we once had. Previous financial struggles and current reality limits the staff we have available to serve churches. If relationship and familiarity are significant factors in raising operating budgets (and I think they are), we are affected by our inability to maintain the number of relationships we had in the past.

Anonymous by Request

I have only been executive director for the past two months, and in that time I experienced an organization consumed with a new and chaotic move. The previous executive director had not done any formal fundraising for operations for over 6 months, and, as a result, we have lost a lot of the momentum that had been gained during his first few years. I learned all this as I entered a place with no computer, no phone, and no heat for the first month in the new facility. Needless to say, people have had to be committed to contact our organization these months—not a pretty picture for fundraising. Only last week did I find the capacity to send an end-of-year letter for donations, and will likely not see a lot. This said, the organization with a budget of $400,00 plus has had about $70,000 from churches and individuals donated this year—a record for the past 10 years. The only way forward is up. We anticipate some great changes in funding operations with a development committee on the board of directors who have met for the first time ever, and are seemingly very committed and competent.

Anonymous by Request

We had a net shortfall of $10,477. The individual giving was down by $13,918, and church giving was down by $7,483; planned-giving receipts were up. We have determined that we have a very mature donor base and they are either dying or moving to a more fixed income source. We definitely need to add younger donors to our base.

Roland Rackham, CFP, CHFC, ACSE
Vice President for Advancement

We received a fairly large percentage of undesignated gifts because our donors have a high level of trust in the organization. We have some 5-figure donors, for example, who have an interest in a particular area, and that motivates them to call. But they say to use the money where ever the highest priority is. Our leader tells us to stay within what God is providing, so we basically let people know what God is doing and how they can be involved, then leave the rest up to the Holy Spirit. We inform donors and let them know what’s going on and tell them how they can help in our monthly letters, but we really don’t ask people for money, with the possible exception of foundations. But even with foundations, the focus is on serving the donor.

Anonymous by Request

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